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Inequality: The original economic sin of capitalism? An Evaluation of Thomas Piketty's "Capital in the twenty-first century"

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  • Facchini, Francois
  • Couvreur, Stéphane

Abstract

This is a review article of Thomas Piketty's book “Capital in the twenty-first century”. Piketty promotes the old theme that, under capitalism, the rich tend to become richer and the poor become poorer, at least in relative terms. We consider whether the data really shows that wealth and income are becoming more concentrated; the role of income transfers (Piketty's data is for pre-tax and pre-transfer income) and other influences on inequality such as real estate prices; the implications of social and economic mobility; the role of the state in fostering inequality; and the determination of socially acceptable inequality. We conclude that Piketty has not succeeded in showing that the inequality r>g (the rate of return is greater than the rate of growth) is the principal determinant of inequality. Piketty offers neither an accompanying theory of social justice nor a theoretical framework to support his case. In particular, lacking is a revealed appreciation of the effects of high marginal tax rates on growth and efficiency.

Suggested Citation

  • Facchini, Francois & Couvreur, Stéphane, 2015. "Inequality: The original economic sin of capitalism? An Evaluation of Thomas Piketty's "Capital in the twenty-first century"," European Journal of Political Economy, Elsevier, vol. 39(C), pages 281-287.
  • Handle: RePEc:eee:poleco:v:39:y:2015:i:c:p:281-287
    DOI: 10.1016/j.ejpoleco.2015.05.001
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    1. IES : l’avenir des libertés individuelles se joue maintenant !
      by Auteur invité in Contrepoints on 2016-08-02 07:40:51

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    Cited by:

    1. Bisin, Alberto & Verdier, Thierry, 2017. "Inequality, redistribution and cultural integration in the Welfare State," European Journal of Political Economy, Elsevier, vol. 50(C), pages 122-140.
    2. Yew-Kwang NG, 2016. "Extending Economic Analysis to Analyze Policy Issues More Broadly," Economic Growth Centre Working Paper Series 1609, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.

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    Keywords

    Inequality; Unfair order; Rent-seeking society;

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